Orange County Market Report | July 2018
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How do you get started? You need to know your market! And, we know the Orange County real estate market. Whether you are an Orange County home buyer or seller, start here. Check back with us every month for your Orange County Market Report. We promise to deliver the stats and facts you need to know your market.
A Buyer’s Market?
The overall Orange County market is a seller’s market, but not at a certain price point. Recent headlines highlight the median sales price, which has reached a record level in Orange County and in all Southern California. How in the world can any local market be a buyer’s market? The truth is that the Orange County market feels a bit frigid in the higher end compared to the rest of the market.
Real estate articles discuss the overall housing market. For the Orange County market, the median reached a record in May at $738,500. For perspective, the national median was $264,800. Therefore, it is absolutely true that real estate is hot and has been hot since 2012.
However, local news articles are referring to the median of the Orange County market, homes below $1 million. This accounts for 78% of all closed sales this year. It is still a hot seller’s market below $750,000. And, a “seller’s market” refers to when the expected market time is below 90-days.
Supply and Demand
While it may be true that the lower the price range, the hotter the market; the reverse is true as well, the higher the price range, the cooler the market. For homes priced above $750,000 in the Orange County market, housing is hot. For homes priced above $1.25 million in the Orange County market, housing is cool.
- $0 - $500k: 843 Actives / 527 Demand / 48 (Days) Expected Market Time
- $500k-$750k: 1,458 Actives / 902 Demand / 48 (Days) Expected Market Time
- $750k - $1m: 1,253 Actives / 587 Demand / 64 (Days) Expected Market Time
- $1m - $1.25m: 634 Actives / 225 Demand / 85 (Days) Expected Market Time
- $1.25m - $1.5m: 481 Actives / 128 Demand / 113 (Days) Expected Market Time
- $1.5 - $2m: 529 Actives / 106 Demand / 150 (Days) Expected Market Time
- $2m - $4m: 751 Actives / 100 Demand / 225 (Days) Expected Market Time
- $4m + : 413 Actives / 29 Demand / 427 (Days) Expected Market Time
Why the change? Let’s take a look at the biggest indicators for this shift in the Orange County Market.
While there is plenty of supply, demand just is not hot like the lower ranges. For homes priced between $1.5 million and $2 million, the expected market time is at 150 days. That would be opening escrow at the end of November. For homes priced between $2 million and $4 million, the expected market time climbs to 225 days. That would be opening escrow in mid-February of next year. For homes priced above $4 million, the expected market time balloons to 427 days, which translates to opening escrow in September of next year, 14-months from now.
The number of potential buyers that can afford to purchase a home diminishes as prices rise. In the lower ranges, that is where there are plenty of buyers and not enough choices. They attract a steady stream of buyers and many sellers entertain multiple offers. Yet, at the luxury end of the market, most sellers sit on the market for months and do not find success. There is tremendous seller competition for a limited number of buyers able to afford these homes.
Sellers who are not priced close to Fair Market Values are not finding success. In order to find success within the luxury price range, sellers must pack their patience and keep their home on the market for a lot longer than the lower ranges. Some homes may fly off the market at the higher price points, but they are the exception and not the rule. Luxury sellers also must be priced right. Like any home, buyers are unwilling to pay more than a home’s Fair Market Value.
The Bottom Line
The best advice for a luxury seller: do not pay attention to all of the real estate headlines. Instead, you should rely on the professional analysis and advice of a seasoned REALTOR®. It may still be a seller’s market, but sellers must carefully price their homes to be successful in this evolving Orange County Market.
As with everything, the Orange County market does not change overnight. This year still promised to be a very good year for sellers, only a bit more challenging. Approach the market with a deliberate strategy and have a local expert on your side – that’s where we come in!
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